VALLON PHARMACEU(VLON) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents GRI Bio, Inc.'s unaudited interim consolidated financial statements as of June 30, 2024, reflecting increased cash and equity from financing and continued operating losses Consolidated Balance Sheets Total assets increased to $7.0 million from $3.0 million by June 30, 2024, driven by cash, with stockholders' equity rising to $4.7 million Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2024 (unaudited) | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $6,353 | $1,808 | | Total current assets | $6,884 | $2,934 | | Total assets | $7,031 | $2,956 | | Liabilities & Equity | | | | Total current liabilities | $2,216 | $2,697 | | Total liabilities | $2,312 | $2,697 | | Total stockholders' equity | $4,719 | $259 | | Total liabilities and stockholders' equity | $7,031 | $2,956 | Consolidated Statements of Operations Net losses significantly reduced to $2.3 million (Q2) and $4.1 million (H1) in 2024, driven by lower general and administrative expenses Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $877 | $880 | $1,811 | $997 | | General and administrative | $1,380 | $5,054 | $2,342 | $5,926 | | Loss from operations | ($2,257) | ($5,934) | ($4,153) | ($6,923) | | Net loss | ($2,250) | ($6,746) | ($4,137) | ($8,896) | | Net loss per share | ($4.92) | ($239.37) | ($8.82) | ($433.14) | Consolidated Statements of Cash Flows Cash used in operations was $4.3 million, offset by $8.9 million from financing, resulting in $6.4 million cash at period-end Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Cash used in operating activities | ($4,344) | ($2,119) | | Cash used in investing activities | $0 | ($8) | | Cash provided by financing activities | $8,889 | $6,917 | | Net increase in cash | $4,545 | $4,790 | | Cash at end of period | $6,353 | $4,799 | Notes to Unaudited Interim Consolidated Financial Statements Notes detail business, liquidity, merger, and accounting policies, highlighting focus on therapies, financing reliance, and going concern doubt - GRI Bio is a clinical-stage biopharmaceutical company focused on therapies for diseases associated with dysregulated immune responses. Its lead product candidate, GRI-0621, is an oral inhibitor for idiopathic pulmonary fibrosis (IPF)[19] - The company has incurred operating losses since its 2009 inception, with an accumulated deficit of $35.7 million as of June 30, 2024. Its ability to continue as a going concern is dependent on raising additional capital[23][35] - The company completed a reverse merger with Vallon Pharmaceuticals, Inc. on April 21, 2023, which was accounted for as a reverse recapitalization[20][51] - The company has conducted multiple reverse stock splits, including a 1-for-7 split in January 2024 and a 1-for-13 split in June 2024[21] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses business, financing, and liquidity, focusing on GRI-0621 advancement, with current cash projected to fund operations only into Q1 2025 Overview and Recent Developments GRI-0621 advances in Phase 2a for IPF with Q4 2024 interim data expected, following 2024 financing rounds and Nasdaq compliance regain - The company's lead candidate, GRI-0621, is being evaluated in a Phase 2a biomarker study for idiopathic pulmonary fibrosis (IPF), with interim data expected in Q4 2024 and topline results in Q1 2025[90] - Development of the second product candidate, GRI-0803 for autoimmune disorders like lupus, is limited pending additional funding[91][92] - In 2024, the company executed multiple financing agreements, including a securities purchase agreement in February for net proceeds of $4.4 million, an At The Market (ATM) offering initiated in May, and another securities purchase agreement in June for net proceeds of $3.2 million[94][96][98][126][128] - The company regained compliance with Nasdaq listing requirements for minimum stockholders' equity and minimum bid price in July 2024 after receiving deficiency notices[100][101] Results of Operations R&D expenses increased by $0.8 million in H1 2024, while G&A decreased by $3.6 million, leading to a net loss improvement to $4.1 million Comparison of Operating Results for the Six Months Ended June 30 (in thousands) | Expense Category | 2024 | 2023 | Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Research and development | $1,811 | $997 | +$814 | Increased expenses for the GRI-0621 development program | | General and administrative | $2,342 | $5,926 | -$3,584 | Decreased professional fees (legal, accounting, banking) following the 2023 Merger | | Net Loss | ($4,137) | ($8,896) | +$4,759 | Primarily due to lower G&A expenses and absence of prior-year interest expense | Liquidity and Capital Resources With $6.4 million cash and $35.7 million accumulated deficit, current funds are projected to last only into Q1 2025, raising going concern doubt - The company had $6.4 million in cash as of June 30, 2024[121] - Cash provided by financing activities was $8.9 million for the first six months of 2024, mainly from stock and warrant issuances[124] - Management projects that existing cash and cash equivalents will fund operations only into the first quarter of 2025[131] - The company's financial condition raises substantial doubt about its ability to continue as a going concern, and it will need to obtain substantial additional funding[132] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as the company is a smaller reporting company - Disclosure is not required as the company qualifies as a smaller reporting company[137] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2024, with no material changes in internal control - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2024[141] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[142] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings - The company reports no material legal proceedings pending or threatened against it[144] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes from the risk factors disclosed in the Annual Report have occurred[145] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or issuer purchases of equity securities during the period - There were no unregistered sales of equity securities or issuer repurchases during the quarter[146] Item 5. Other Information During the three months ended June 30, 2024, none of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement in the second quarter of 2024[148] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer - The report includes a list of exhibits filed, such as corporate governance documents, warrant forms, the At The Market Offering Agreement, and officer certifications required by the Sarbanes-Oxley Act[149]